President's Jobs Kill Bill

If the President's lofty promises about his new jobs bill sound familiar, it's because he has recycled the same tired, old rationale he used to cajole Congress to approve his $787 billion stimulus boondoggle shortly after he took office.

To refresh your memory, the Obama administration's economic team predicted that the president's stimulus package would create three to four millions jobs by the end of 2010.  They boldly forecast that the unemployment rate would peak at just under 8 percent in 2009.

Many Democrats now deny these claims were ever made.  However, the numbers are contained in a report entitled, "Job Impact of American Recovery & Reinvestment Plan," published January 9, 2009.  The authors were Christina Roma, then chairwoman of the President's Council of Economic Advisers and Jared Bernstein, the vice president's top economic counselor.

Their predictions, used to justify the massive spending, were grossly inflated.  Unemployment peaked at more than 10 percent in early 2010.  It remains today at 9.1 percent.  As far as those promised jobs,  even Vice President Joe Biden has given up trying to use creative math to prove the stimulus delivered on the administration's prophecy.

Now the president is on the road again clamoring for Congress to buy into new promises of economic nirvana.   In speeches, he continues to claim his job proposal will grow the economy two percent and create two million new jobs.  Obama will need more than snake oil to convince wary Republicans and Democrats that his forecasts are any better than they were the last time he trotted out an economic recovery plan.

In fact, there is evidence that the new jobs bill will harm rather than help the economy.  The chief reason is the president's plan would finance the $447 billion scheme mainly by limiting the percentage of income the top wage earners can write off their taxes.   For example, the same write-offs that average taxpayers use would be reduced for high income households and individuals from 35 percent of their earned income to 28 percent.  That would include donations to charitable organizations.

It means a charitable gift of $100,000 would save a donor $28,000 in taxes, which is $7,000 less than the write off allowed under today's formula.  The lower deductions would apply to households earning at least $250,000 and $200,000 for individuals.  Studies have shown that individual giving is influenced to varying degrees by the tax write-off.

Not only would the change have a chilling effect on donations, it also could impact jobs at one of the nation's top employers. "Nonprofits employ almost 10 percent of the workforce nationwide and in many states nonprofits are the largest employers.  In our view, cutting the deduction is like cutting off your nose to spite your face," protested William Daroff, vice president of Public Policy at the Jewish Federation of North America.

If donations decline as a result of individuals cutting back on their giving, charitable groups will be forced to cut expenses, making employee layoffs likely.  Even more worrisome, the poor, sick and elderly who benefit from the charitable organizations' outreach programs will lose a safety net.

Yet the charitable deduction issue is not even the most egregious example of flawed logic contained in the bill.  The president's plan also includes extending unemployment benefits for another year for recipients at a taxpayer cost of $62 billion  Most credible economists argue that extending benefits will discourage the unemployed from seeking work.  At the very least, it further delays their job search until benefits run out.  Either outcome will negatively impact job growth.

None of this will deter Obama.  He appears obsessed as ever with the idea that bigger government and more spending will solve the country's economic problems.  After being hoodwinked on the stimulus plan, Congress must not allow itself to succumb to Obama's empty promises a second time.